The great majority of liquid storage systems feature multiple independent dispensing devices each with its own meter or set of meters. Physical measurement of the calibration accuracy of the meters is expensive and disrupts facility operation. On the other hand, at a high volume site pumping as much as one million gallons per month, a 5000 gallon excess stock loss could be pumped through meters out of calibration by as little as one-half of one percent of flow.
Regardless of the number of dispensing devices, storage systems are susceptible to leaks. Slow leaks can go undetected over time due to inaccuracies in meter calibration, i.e., a slow leak can be misinterpreted as an inaccuracy in meter calibration. Undetected leaks, and undetected increases in leak rates result in wasteful loss of stored liquid.
Large quantities of liquids and similar materials are often stored in bulk storage containers or tanks, which may be located above-ground, partially above-ground, or completely below ground. Such containers or tanks are generally connected by piping to flow-meters or dispensers.
For example, underground storage tanks (UST's) and, occasionally, above-ground storage tanks (AST's) are used to store petroleum products and fuel to be dispensed at automobile service stations, trucking terminals, automobile rental outlets, and similar operations through gasoline, diesel, or kerosene dispensing pumps. Fuel product is generally delivered to such facilities by a gravity drop from a compartment in a wheeled transport means such as a fuel delivery truck or an introduction of product through an underground piping system. AST's or UST's are often located at central distribution locations so that product can be subsequently withdrawn from the tank system to be transported for delivery to a variety of such facilities. A distribution location with UST's or AST's may receive deliveries of product from, e.g., a pipeline spur, wheeled transport, a barge, or a rail car.
Direct observation of the operating condition of such tanks and storage containers is difficult or impossible. The various methods for identifying the amount of product in tank systems have varying levels of accuracy, repeatability, and performance. Moreover, the accuracy of devices which measure the amount of product dispensed from the storage containers and tanks differs greatly, and may or may not be temperature compensated. The amount of product actually delivered to the tank system is often measured inaccurately and, frequently, not at all. Rather, the owner or operator of the tank or vessel usually records the invoiced amount of product delivered as the actual amount introduced to the tank system, without having any means of confirming whether the invoiced amount of product delivered is correct.
Consequently, effective management of such facilities is complicated by the numerous errors in the various measuring devices and procedures used to establish a baseline for management, planning and decisionmaking. Effective management requires the following:                1. Accurate measurement of the volume stored in the system.        2. Accurate determination of the volume dispensed from the system.        3. Accurate determination of the amount of product introduced into the system.        4. Identification of volumes added to or removed from the tank system which are not otherwise recorded.        5. Rapid identification of leakage from the tank system.        6. Continuous monitoring and diagnosis of the operating performance of all of the component measuring devices of the system.        7. Continuous analysis of sales data to predict demands of product from the system.        8. Determination of optimal reorder times and quantities as a function of ordering, transportation, holding, and penalty costs in order to minimize total costs of operation and/or to maximize profits.        
Traditionally, these functions were performed crudely or, in many cases, not at all. Volume measurements were, and in many instances still are, based on imperfect knowledge of the geometry, dimensions, and configuration of the storage vessel. Also, dispensing meters are frequently miscalibrated. This is true even when tank systems are regulated, due to the breadth of tolerance permitted for individual sales as related to total tank volume. For example, deliveries from the delivery vehicle are almost always unmetered, additions of product from defueling vehicles are typically undocumented, and theft of the product is not uncommon.
Leakage of product has, in recent years, assumed a dimension far in excess of the mere loss of the product. Environmental damage can, and frequently does, expose the operator to very large liabilities from third party litigation in addition to U.S. Environmental Protection Agency (EPA)-mandated remediation which can cost in the range of hundreds of thousands of dollars. The EPA's requirements for leak detection are set forth in EPA Pub. No. 510-K-95-003, Straight Talk On Tanks: Leak Detection Methods For Petroleum Underground Storage Tanks and Piping (July 1991), which is incorporated herein by reference.
To address these concerns, Statistical Inventory Reconciliation (SIR) was developed. The SIR method consists of a computer-based procedure which identifies all of the sources of error noted above by statistical analysis of the various and unique patterns that are introduced into the inventory data and, in particular, into the cumulative variances in the data when viewed as functions of product height, sales volumes, and time.